Nabucco Investment Decision Delayed to 2011

A final investment decision on investment for the Nabucco pipeline will definitely not happen this year, and will be delayed until 2011 because gas supply talks with Azerbaijan are dragging on, an Austrian newspaper reported on Friday.

The 7.9 billion euro ($11 billion) Nabucco pipeline is part of the EU's effort to diversify its natural gas supplies by bringing up to 31 billion cubic metres of gas annually from the Caspian region to an Austrian hub via Turkey and the Balkans.

Construction on the project, which has already been subject to several delays, is scheduled to start next year with the first gas deliveries at the end of 2014.

"We are definitely not going to manage it (the decision) this year, it will not happen until 2011," Michael Ulbrich, head of international pipeline projects at Austrian energy group OMV, was quoted in the daily Der Standard as saying.

Der Standard said longer-than-expected talks with Azerbaijan had led to the delay.

Azerbaijan has been in talks with more than 20 firms and consortiums and will decide later this year which project gets gas from its giant Shah Deniz II gas fields, co-led by BP (BP.L) and Statoil (STL.OL).

The government has said the gas contracts will go to the company that offers the highest price, and the Nabucco and Russian offers are seen as the main contenders.

Russian gas export monopoly Gazprom (GAZP.MM) said recently its competitors would not be able to beat its price for gas from Shah Deniz.

Nabucco expects the pipeline will transport its first gas from Iraq, 10 billion bcm, and another 8 billion bcm from Shah Deniz in 2015.